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TMI Blog1979 (6) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... al who was carrying on business in the name of M/s Sarala Stores which have a dealership in Indian Oil as well as an agency of certain newspapers. By a deed of partnership dt. 30th Oct., 1972, the assessee converted the proprietary business into a partnership by inducting his major son and granting 75 per cent share in the firm. The GTO asked the assessee to show cause why this transfer of 75 per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 20,473 and computed 75 per cent of three years' purchase price of the share transferred to the son. 3. The assessee appealed to the AAC and contended that the business had no goodwill and in any event the transfer was in course of business and exempt under s. 5(1)(xiv) of the Gift-tax Act. The AAC was of the view that the allotment of 75 per cent of the share was disproportionate to the manag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oducts(1) that an assessment to gift-tax by taking only one of the assets of the assessee's proprietary business namely its goodwill cannot be sustained and no gift-tax was payable on the goodwill of the business. In view of this decision there are no merits in the cross-objection. The Supreme Court has further held that for the exemption under s. 5(1)(xiv) it must be established that there was so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k after both the businesses properly and regularly particularly because of the fact that he has become victim of high blood pressure and other diseases and whereas the first party for the reason aforesaid proposed to the second party to be a partner with him in his aforesaid business (Sarala Stores) to which the second party agreed and whereas the parties are accordingly carrying on the said busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artner did not amount to a gift, for, it was fully supported by commercial consideration. Hence, the transaction was not a gift and in any event was exempt under s. 5(1)(xiv) of the Act. Even if it could be held to be a gift, it is obvious that the business had no goodwill since it was dependent on the agency with Indian Oil which could be terminated at any time. There being no goodwill at all the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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